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What makes a decision strategic? When is strategy most important? This paper formally studies these questions, starting from a (functional) definition of strategy as “the smallest set of choices to optimally guide (or force) other choices.” The paper shows that this definition coincides with the equilibrium outcome of a “strategy formulation game,” in which such strategy endogenously creates a hierarchy among decisions. With respect to what makes a decision strategic and what makes strategy valuable, the paper considers the effect of commitment, reliability, and irreversibility of a decision; the presence of uncertainty (and the type of uncertainty); the number and strength of its interactions and the centrality of a decision; its level and importance; the development of capabilities; and competition.

Despite facing giants like Coke, Pepsi, and Budweiser—with obvious potential sources of competitive advantage—Red Bull had established itself as the U.S. market leader in energy drinks. By 2008, however, Red Bull's dominance was challenged as Monster drinks surpassed it in volume. The case considers judo strategy both from the perspective of a small player (when up-start Red Bull faces Coke, Pepsi, and Bud) and as a large player (when market leader Red Bull faces up-start Monster).

On the Upper East Side, fifty fit women and men cycled in unison to blaring music in an indoor cycling studio shrouded in darkness except for the grapefruit-scented candles lining the podium. A few who had proven their skills were selected to lead the pack in the coveted front row, next to Jake Gyllenhaal and Selena Gomez. The cyclists, clad in spandex and tank-tops featuring the SoulCycle logos, dripped sweat as they climbed hills and sprinted down flat roads while the instructor shouted inspirational slogans. SoulCycle was a leading indoor cycling studio with a massive following. It had grown from a single, 31-bike studio in 2006 to a network of 38 studios in seven metropolitan areas in 2015 (Exhibit 1). Compared to the many other health clubs that existed, SoulCycle saw itself as a lifestyle brand that aimed to “empower riders in an immersive fitness experience."
CEO Melanie Whelan led SoulCycle’s growth since 2012 and was committed to expanding its footprint, opening 10-15 new studios per year. In July 2015, the company announced an IPO – which valued the company at $900 million – but it was ultimately postponed due to macroeconomic uncertainty. Although Whelan was confident about the company, she knew that the ride was getting more challenging and struggled with how to keep cyclists loyal to the high-priced brand.